Shui On Land US dollar bonds plunge

Published 30 May 2024, 11:26

Shui On Land's US dollar bonds dropped four to eight points on Wednesday on news that the property developer is assessing the options to address its maturities.

The company has three dollar bonds outstanding: a US$500m 6.15% August 24 2024, a US$489.9m 5.5% March 3 2025 and a US$400m 5.5% June 29 2026. The 6.15% 2024 note dropped to 88.75 from 93.625, while the 5.5% 2025s and 5.5% 2026s both lost eight points to trade at 75.875 and 66.5 respectively, according to LSEG data.

The drop was triggered by a report from Bloomberg that Shui On is meeting banks to explore options for the US dollar bonds. Lucror Analytics analysts view the meeting as a prelude to a bond exchange but said Shui On may be able to pledge its assets under a debt restructuring scenario, which would support the bonds' recovery values, according to a note today.

The developer has been considered a better credit than other Chinese property developers with a small but clean business model. It has residential projects in only two major cities, Shanghai and Wuhan, and key commercial property projects located in five cities.

Nomura analysts wrote in a note in March that they saw room for Shui On to raise additional funding but that it needed to act quickly. They said at that time the developer's funding gap was a liquidity issue rather than a solvency issue considering its high-quality Shanghai commercial portfolio.